VDM Group (VMG)

Engineering contractor
VDM
appears to have turned its fortunes around, delivering a robust interim profit update at the end of last week that sparked a 3.3 per cent surge in VDM’s share price on Friday.

Management is expecting earnings before interest, tax, depreciation and amortisation of more than $17 million and net profit of about $5 million for the six months to December 31, 2009.

These figures would represent a greater than 50 per cent jump over the same period last year with the company crediting a pick up in demand for its engineering and mining services, especially in resource-rich Western Australia.

VDM struggled during the global financial crisis due to debt issues that were complicated by the fact that it had to make significant write-downs of goodwill and property values.

But brokers are now bullish on the stock, which is trading on a price/earnings multiple of about 6.5 times compared with the average 10 times multiple of its peer group.